Linea Directa Aseguradora, S.A.

Good morning and welcome to Linea Directa's conference call to discuss September 2024 results. I'm Mark Brewer from the Investor Relations Team. As usual, we will first walk you through the slides and then we'll be happy to take any questions you may have. Now let me turn the call over to our CFO, Carlos Rodriguez Ugarte.

Thank you very much, Mark, and good morning and thank you for joining us. I will go straight to page number five. After nine months of 2024, we can clearly confirm a strong consolidation of the group's P&L and an important turnaround of client growth since the second half of the year. We are pleased to present these results. Combined ratio stood at a 95.4% in the first nine months of the year, 10.6 percentage points below that of 2023, and the same ratio in the third quarter standalone, that is 94.4%. As in previous quarters, this remarkable improvement year-wise for our combined ratio has been driven by both an improvement of the loss ratio, but also our ongoing effort on the spend side of the business, where again our spend ratio has improved 0.4 percentage points from 22.4% to 22.0%. As for the revenue side of the business, our gross return premiums grew 3.5%, With a clear improvement in the third quarter standalone, where premiums grew by almost 6%, noteworthy growth has accelerated in the health line of business. Another highlight, which we already anticipated in our previous results call, has been the growth in the customer portfolio. During the third quarter standalone, it grew by more than 39,000 clients, reversing the recent loss trend and accelerating its gain over past quarters. Net income increased by 40.7 million euros, which compares to the loss of 12.5 million euros reported for the first nine months in 2023. Finally, solvency ratio stood at 189.5%, mainly driven by the positive results seen during the quarter. Turning to page number seven, insurance revenues were up 2.9% with the contribution of all line of businesses. Technical insurance result stood at 32.9 million euros, confirming the positive trend we have seen throughout the year. Loss ratio dropped by 10.2 percentage points and expense ratio further 0.4 points. Hence, combined ratio dropped to 94.4%. Likewise, for the third quarter standalone, coal mine ratio stood at an excellent 94-95.4%, which compares to 102.2% for the same quarter of last year. Investment result was up 6.1%. Underlying investment results will have been up by 11.7%, excluding the prudent write-off we have recorded for the ATOS bond during the previous quarter. Credited interest, which is shown separately from investment results for clarity purposes, is the financial unwinding on the prior year discounting of the provision for claims incurred. The unwinding was an expense of 6.5 million euros for the first nine months of the year. Altogether, profit after tax stood at 40.7 million euros, which compares to the loss of 12.5 million euros over the same period of last year, a turnaround of more than 52 million euros. Let's go to page number eight. As usual, we break down premiums and policyholders by line of businesses. Health continues to enjoy significant revenue growth. It is also important to mention the very positive evolution of the gross return premium for each business line on a quarterly basis. Third quarter standalone has shown significant improvement on the revenue side of the business. The portfolio also grew quite significantly during this quarter standalone for motor and home, confirming the trend already reflected in the second quarter of the year. Turning to page number nine, the portfolio in the motor business grew more than 19,800 policyholders. Gross return premiums on the quarter grew by 5.4% as compared with 1.1% in the second quarter. Combined ratio, again, had extraordinary progress, 95.1% on the quarter and 95.5% on the year. Clearly reflects the effort and actions that the company has been implementing in the last couple of years. Let's go to page number 10. In the home business, as we modeled, the portfolio of customers grew by more than 2,900 clients during the third quarter, reinforcing the upward trend we already had on the second quarter of the year. Premiums grew 4.8% on the year, but if we look at the third quarter by itself, this growth reaches 5.7%. Combined ratio remains quite low for the year and stands at 89.8% year-to-date and 91.8% for the third quarter standalone. Still, this quarter's low presence of weather events was a key component to which it also added the careful subscription of the company. As with regard to the health business, the remarkable growth continues, posting a 10% increase in premiums for the year and 12.9% increase on the quarter standalone. Combined ratio also had an outstanding performance as compared to last year, and it keeps moving downward. As usual, full disclosure on combined loss and expense ratios by line of businesses is provided in page 23 and in the Excel financial supplement. Please let's move now to slide number 12. Loss ratio stood at 73.4%, 10.2 percentage points lower compared to last year, with motor leading improvement with a 10.7% decrease in claim costs. Also, home and health posted lower claims experience on the back of good behavior in average costs and frequencies. Turning to page 13. On expenses, the company keeps on improving its efficiency, and once again, it has improved its overall expense ratio to 22% on the year, representing an improvement of 0.4 percentage points over last year. Noteworthy, the expense ratio for our core business, Motor, which stood at a remarkable 19.96% on the year, has improved 0.6 percentage points since the first quarter. Turning to page number 14 on financial results, investment results was up 6.1%. Let's remember that on the second quarter, in a prudent approach, the company decided to record an impairment in a bond of the French technology company Atos. Excluding such effect, financial results will have been up by 11.7%. The increase is driven by the income from the fixed income portfolio, especially on the corporate bond portfolio. As usual, we are providing the credited interest in a separate line for clarity purposes. On slide 15, we disclose the portfolio composition, the movements that flow directly through equity under IFRS 9 and some other metrics. The message here is that the overall yield of the portfolio still stands at around 3%, excluding realized gains or losses, and the overall duration of the fixed income portfolio is 3.1 years. Portfolio composition with minor changes remains pretty much the same. Moving on to our solvency position. Solvency margin rose to 189.5% in the quarter. with positive contributions to eligible owned funds coming from the profit of the quarter and the development of the available for share portfolio. For each part, SCR increased by 6.9 million euros in the quarter, mainly driven by market risk due to the greater exposure to fixed income and equities and the quarterly symmetric adjustment published by the European regulators. This was partly offset by the lower counterpart risk as balance in deposit decreased. To conclude, our September results so far that the company is back on track in client growth, sound risk profiling, ongoing efficiency efforts, and last but not least, a remarkable improvement in revenues and profits. As we always say, these results are a reason to be pleased, but again, We believe the company strategy, the company culture, and the people of the company will allow us to deliver better results in the short term. Thank you very much. I will now hand the call over to Mark to begin the Q&A session.

Thank you for the presentation, Carlos. First, we'll begin with the questions received from the conference call.